Long-term capital gain shall be calculated on profit on sale of shares held as long-term investment by the assessee. Further, assessee entitled for exemption under section 10(38) – as per high Court ruling in Commissioner of Income tax, Chennai vs. Stargate Investments (P.) Ltd.
Facts:
The assessee wais engaged in the business of investment in shares and securities. The assessee sold shares of India Cements Ltd., and claimed exemption under section 10 (38) of the Income-tax Act as Long Term Capital Gains for the assessment years 2006-2007 and 2008-2009. In the assessment proceedings, the AO held that profit on sale of shares to be taxed as business income and not as long-term capital gains.
On appeal, the Commissioner (Appeals) allowed the assessee’s claim. It was viewed that the shares held by the assessee were in the nature of capital asset and not stock-in-trade.
The Tribunal confirmed the order of the CIT(A).
Appeal was made before the High Court.
Held:
The Court viewed that the shares were held by the assessee was long-term investment and there was no basis to treat it as stock-in-trade of the assessee company. In addition, it was opined that opinion that there is no reason to differ from the finding of fact recorded by the CIT (Appeals) and the Tribunal in the present case, as the same is only a sequel to the earlier order in Stargate Investments (P.) Ltd. in respect of the assessee’s own case in earlier assessment year, wherein similar relief was granted in favour of the assessee.
Thus, the appeal got dismissed and it was concluded that if shares held for investment purpose then profit on sale of shares shall be capital gains.
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